How to Start a Perfume Line Business

Do you want to start a perfume line? If YES, here is a complete guide to starting a perfume line business with NO money and no experience.

Okay, so we have provided you an in-depth sample perfume line business plan template. We also took it further by analyzing and drafting a sample perfume line marketing plan backed up by actionable guerrilla marketing ideas for perfume line businesses. In this article, we will be considering all the requirements for starting a perfume line business. So put on your entrepreneurial hat and let’s proceed.

Why Start a Perfume Line Business?

If you intend to start a business and you don’t want to struggle much in growing the business and generating sales, then you should look towards starting a business whose products or services are needed in our daily existence. One of such businesses is a perfume manufacturing company.

Perfumes and other cosmetics and beauty products are products that are used in all parts of the world; and of course those that are in the business of producing perfume and other cosmetics and beauty products, are known to generate sales year in year out if the business is well managed.

As a matter of fact, economic downturn hardly affects the consumption of perfume and other cosmetics and beauty products simply because it is a commodity that plays a major role in our daily living. This is no wonder the production of perfume and other cosmetics and beauty products have continued to soar high.

If you are however thinking of dabbling into the production of perfume, then you must be ready to really learn the ropes and scale through all the necessary hurdles. If indeed you are interested in starting a perfume manufacturing company, then you will surely find this article very helpful.

Starting a Perfume Line Business – A Complete Guide

Industry Overview

Perfume and other cosmetics and beauty products manufacturers basically prepare, blend, compound and package perfume and other beauty products and cosmetics for their clients. Cosmetic and beauty products included in this industry are perfumes, makeup items, hair preparations, face creams, lotions and other toiletries.

Inconsistent income do not really affect perfume and other cosmetics, but essential goods such as shampoo, experience steadier demand. The revenue generated in this industry has increased steadily in recent years, as some of the industry’s largest export partners began to experience post – recessionary growth. Going forward, the industry’s diverse product lines and commitment to research and development will keep revenue growth stable.

The Cosmetic & Beauty Products Manufacturing Industry that perfume manufacturing companies fall under is a thriving sector of the economy of the United States of America and they generate well over $42 billion annually from more than 3,361 registered and licensed cosmetics & beauty product manufacturing companies scattered all around the United States of America.

The industry is responsible for the employment of well over 51,263 people. Experts project the industry to grow at a 1.8 percent annual rate from 2011 to 2016. Estee Lauder, Mary Kay and L’Oreal USA, Inc. have the lion market share in the Cosmetic & Beauty Products Manufacturing industry in the United States of America and in some other countries.

Research conducted by IBISWORLD show that the Cosmetic and Beauty Products Manufacturing industry is in the growth phase of its life cycle, though it is likely to enter the mature phase in the near future. Industry value added, a measure of the industry’s contribution to the overall economy, is forecast to grow at an average annual rate of 0.7 percent in the 10 years to 2021.

This rate is significantly slower than GDP growth, which is anticipated to increase at an average annual rate of 2.2 percent during the same period. IVA growth being lower than GDP growth is typically indicative of an industry in the mature or declining stage of its life cycle, the Cosmetic and Beauty Products Manufacturing industry is still growing as it is still experiencing high rates of industry entrants and product development.

With this kind of business, if you want to start on a small scale, you can choose to start servicing your city and state. All you would need is contacts, packaging, networking and good marketing and customer service skills. However, if you intend starting it on a large scale, then you should consider spreading beyond your city to state level and even national level.

Perfume production line of business will continue to blossom because the usage of perfume has become part of our daily life; everybody you see around would want to smell good and that is exactly what perfumes can do for them. Some of the factors that encourage entrepreneurs to start their own perfume manufacturing company is that the business is a thriving business and the products can be sold not just in your country but all across the globe.

Over and above, the perfume manufacturing line of business is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business, compete for the available market and make profits.

Starting a Perfume Line Business – Market Research and Feasibility Studies

Demographics and Psychographics

The demographic and psychographic composition of those who make use of perfumes, body spray, deodorants et al are all encompassing.

So, if you are thinking of starting your own perfume production line business, then you should look beyond producing and marketing your products to just people in your city, but also people across the United States of America and other parts of the world.

List of Niche ideas Within the Perfume/Fragrance Industry That You Can Specialize in

There is no niche area of specialization in the perfume line production business. Those who are into the production of perfumes are also into the production of body spray and deodorants in different sizes and packages to meet the trend in the industry. Branding and packaging is a major factor that can help you increase your sales and gain market prominence in the perfume line production of business.

The Level of Competition in the Perfume Production cum Cosmetics and Beauty Care Product Industry

The competitions that exist in the perfume production line of business goes beyond competitions in your city or country; it is both national and international. This is so because, major perfume lines/brands in France, Italy, United Kingdom and in any part of the world can be found in cosmetics shops all across the United States of America. So, it will be right to say the competition in the perfume production industry is stiff.

The truth is that, no matter the level of competition in an industry, if you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you have what it takes to churn out quality products and you know how to reach out to your target market.

But over and above, there are several perfume production companies scattered all around the United States. So, if you choose to start your own perfume production company in the United States, you will definitely meet stiffer competitions amongst perfume production companies in the United States. Besides, there are larger perfume manufacturing companies/brands that determine the trends in the industry and you should be ready to compete with them for customers.

List of Well Known Brands in the Perfume Making Industry

These are some of the leading perfume manufacturing companies/brands in the United States of America and the globe;

Gucci

Chanel

Dolce & Gabbana

Christian Dior S.A

Prada

Versace

Bvlgari

Hermes

Tom Ford

Chloe

Emporio Armani

Yves Saint Laurent

Vera Wang

Burberry

Jean – Paul Gaultier

DKNY

Marc Jacobs

Davidoff

Hugo Boss

Ralph Lauren

Economic Analysis

If you are looking towards successfully launching a business and maximizing profit, then you need to ensure that you get your economic analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.

Perfume line business is not a green business, as a matter of fact, you will come across several brand names in your local cosmetic store when you go shopping for perfumes, body spray or similar products. So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of the required raw materials, packaging materials and other equipment needed to successfully run the business.

Over and above, if you are considering starting a perfume line company, then your concern should not be limited to the cost of setting up the business and churning out quality perfumes and body spray et al but also on how to build a robust distribution network. The truth is that if you are able to build a robust distribution network, you are sure going to maximize profit in the business.

Starting Your Perfume Production Company from the Scratch versus Buying a Franchise

Unfortunately, you can hardly find a franchise of a perfume line company to purchase, meaning that if you want to own a perfume line business, then you must be ready to start from the scratch. This is so because the business is still pretty much thriving and there are loads of opportunities available to aspiring entrepreneurs that are interested in the industry.

The truth is that it will pay you to start your perfume line company from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business.

Please note that most of the big and successful perfume production companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success and of course you can build your own perfume production line brand to become a successful brand with your products distributed all across the length and breadth of the United States of America and other countries of the world.

Possible Threats and Challenges You Will Face When Starting a Perfume Production Business

If you decide to start your own perfume production business today, one of the major challenge you are likely going to face is the presence of well – established perfume production brands cum companies whose products can be found all across the United States and the global market. The only way to avoid this challenge is to create your own market.

So also, just like any other business, one of the major threats that you are likely going to face is economic downturn and unfavorable government policies. It is a fact that economic downturn affects purchasing power. Another threat that you may likely face also is the arrival of a new perfume line or even cosmetics and beauty care product manufacturing company that also produce perfumes, body spray and similar products in same location where yours is located.

Starting a Perfume Line Business – Legal Matters

Best legal entity to use for a Perfume Business

When considering starting a perfume line company, the legal entity you choose will go a long way to determine how big the business can grow; some perfume line companies design their business and products for regional market, some for national market, while others for the international market.

Generally, you have the option of either choosing a general partnership, limited liability company which is commonly called an LLC, or a sole proprietorship for a business such as perfume production company. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale perfume production business especially if you are just starting out with a moderate start-up capital.

But people prefer limited liability Company for obvious reasons. As a matter of fact, if your intention is to grow the business and have your products distributed across the United States of America and other countries of the world, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.

For example, setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need board of directors, shareholder meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your perfume production business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.

If you take your time to critically study the various legal entity to use for your perfume production business, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your perfume production business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.

Catchy Business Name Ideas Suitable for a Perfume Production Company

When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.

If you are considering starting your own perfume production company, here are some catchy names that you can choose from;

Yvonne Stallone® Cosmetic Line, LLC

Smile Perfume Line, Inc.

Smell Good® Perfumes, Inc.

Gracias Perfume Production Company

Brace Up Perfume Brand, Inc.

Stella Maris Signature, Inc.

Dove Perfume Production Company

Drake & Diana Cosmetics, LLC

Stacie Marcello Cosmetics, Inc.

Baton Rouge Smell, Inc.

Insurance Policies

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your perfume production business.

Here are some of the basic insurance covers that you should consider purchasing if you want to start your own perfume production business in the United States of America;

If you just want to protect your unique formula, your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.

Is Professional Certification Needed to Run a Perfume Business?

Although you do not need any special professional certification before you can successfully start your own perfume line business, but you will do yourself a whole lot of favor, if you study cosmetology or related course before starting this this type of business. It will afford you the opportunity to truly maximize the business; you will be able to have full grasps of the business from start to finish especially as it relates to producing perfumes, body spray and similar products.

List of Legal Documents You Need to Run a Perfume Production Company

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.

These are some of the basic legal document that you are expected to have in place if you want to legally run your own perfume production company in the United States of America;

Certificate of Incorporation

Business License

Business Plan

Non – disclosure Agreement

Employee Handbook

Employment Agreement (offer letters)

Operating Agreement for LLCs

Insurance Policy

Consulting contract documents

Online Terms of Use

Online Privacy Policy Document

Apostille (for those who intend operating beyond the United States of America)

Financing Your Perfume Production Business

Starting a perfume production business can be cost effective especially if you choose to start on a small scale. Securing a standard production facility is part of what will consume a large chunk of your start – up capital, but if you choose to start the business on a large scale, you would need to go source for fund to finance the business because it is expensive to start a standard large scale perfume production company.

No doubt when it comes to financing a business, one of the first things and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for start – up capital for your perfume production business;

Raising money from personal savings and sale of personal stocks and properties

Raising money from investors and business partners

Sell shares to interested investors

Applying for loan from your bank/banks

Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors

Source for soft loans from your family members and your friends.

Choosing a Suitable Location for your Perfume Business

When it comes to choosing a location for your perfume line production business, the rule of thumb is that, you should be guided by the demand for such product and easy access to labor and raw materials in the location you so desire to start the business.

Of course, if you are able to secure a central location for your perfume line production business, it will enable you cut the cost of transporting your raw materials and finished products to and from your production facility and warehouse.

It cannot be overemphasized that the location you chose to open your perfume production business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and lifestyle.

These are some of the key factors that you should consider before choosing a location for your perfume line production company;

The demography of the location

The demand for perfumes, body sprays and similar cosmetics in the location

The purchasing power of the residence of the location

Accessibility of the location

The number of perfume line companies and cosmetics manufacturing companies in the location

The local laws and regulations in the community/state

Traffic, parking and security et al

Starting a Perfume Line Business – Technical & Manpower Details

If you are considering setting up a perfume line production company, it means that you should be prepared to purchase equipment and machines such as blending, mixing and compounding machine, molding machine (roll – on tubes), and packaging, labeling and sealing machines.

This are the basic machines needed to launch the business. If you don’t have enough cash, you can start with fairly used equipment/machines but if you are financially buoyant, then you should go for brand new ones since they usually have longer life span.

As regard leasing or outright purchase of a production facility or warehouse facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent/lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location/facility for such business.

When it comes to hiring employees for a standard perfume line production company, you should make plans to hire a competent Chief Executive Officer (Owner), Admin and Human Resources Manager, Sales and Marketing Manager, Cosmetologist/Quality Control Officer, Machine Operators, Accountant, Distribution/Delivery Van Drivers and Client Services Executive. These are some of the key employees that you can work with. On the average, you will need a minimum of 7 key staff members to run a small – scale but standard perfume line production business.

The Production Process Involved in the Production of Perfumes, Body Sprays and Similar Cosmetic Products

When it comes to the production of perfumes, body sprays and similar cosmetic products, the first step to take is to determine the quantity and types (colors and sizes et al) of perfume and body sprays to be produced. Other steps involved in the entire process are securing raw materials and chemicals (Color pigments, oils, Castor oil, waxes) and labeling and packaging materials. The raw materials are then mixed under the right temperature and then filled into tubes, bottles and cans et al and allowed to cool off. The next step is to properly package, label and brand the products for sale.

It is important to state that a perfume line production company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated perfume and body spray production business process is not cast on stone.

Starting a Perfume Line Business – The Marketing Plan

Marketing ideas and strategies

Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a perfume line production business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands determining the market direction for the perfume line.

These are some of the marketing ideas and strategies that you can adopt for your perfume production line business;

Introduce your products by sending introductory letters alongside your brochure to corporate organizations, businesses in the cosmetics and beauty retailer industries, beauty spas/salons and key stake holders throughout the United States and Canada.

Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on the social media or those who read blogs can know where to go when they need to purchase your perfume, body sprays and similar cosmetic products.

Creating a basic website for your business, so as to give your business an online presence.

Directly market your products.

Engage in road show in targeted communities from time to time to sell your products.

If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portray your business to be. One of the secret of larger corporations is that they are willing to spend fortunes year in and year out to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.

If your intention of starting a perfume production company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.

No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Your corporate identity has a lot to do when it comes to building a business that is profitable and lasts long.

Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your perfume production company;

Place adverts on both print (newspapers and magazines) and electronic media platforms

Install your Bill Boards in strategic locations all around your city or state

Engage in roadshow from time to time in targeted neighborhoods to retail your perfumes, body sprays and other similar cosmetic products

Distribute your fliers and handbills in target areas

Contact corporate organizations, businesses in the cosmetics and beauty retailer industries, beauty spas/salons and key stakeholders throughout the United States and Canada informing them about your products

List your perfume production company in local directories/yellow pages

Advertise your perfume production company in your official website and employ strategies that will help you pull traffic to the site.

Ensure that all your staff members wear your branded shirts and all your vehicles and distribution trucks/vans are well branded with your company logo et al.